Intel shares went vertical on Thursday after a chunky earnings beat and punchy guidance, with the chip shop insisting its turnaround is no longer a fairy tale.
The stock jumped as much as 20 per cent in after-hours trading, pushing past its 2000 peak after it guided to $13.8bn to $14.8bn this quarter. That was ahead of what the cocaine nose jobs of Wall Street were expecting.
Intel chief executive Lip-Bu Tan: “A year ago the conversation about Intel was about whether we could survive. Today it’s about how quickly we can add manufacturing capacity… to meet enormous demand… This is a fundamentally different company today.”
Chipzilla said AI demand is juicing its central processing units, posting first-quarter revenue of $13.6bn, up about seven per cent year on year. That beat Visible Alpha’s average analyst estimate of $12.4bn.
Big Tech is throwing hundreds of billions at AI data centres, where Chipzilla’s CPUs sit next to the whizzier processor chips designed by Nvidia and mostly built by rival TSMC.
The report adds to the hype after Chipzilla’s share price has risen more than 50 per cent in the past month.
Chipzilla’s stock has been motoring since Donald Trump brokered a deal for the US government to take a 10 per cent stake last summer. That was followed by investments from Nvidia and SoftBank.
Its tie-up with Tesla chief executive Elon Musk on the Terafab chipmaking facility and a move to buy back its stake in the Ireland factory from Apollo have steadied nerves.
Chipzilla has poured billions into a loss-making manufacturing push to claw back ground on Taiwan’s TSMC, a gamble that cost Intel its former chief executive, Pat Gelsinger, his job in 2024. Under pressure from Trump, Tan has kept a slimmer version of the plan rolling.
Earlier this week, HSBC analysts upgraded Chipzilla, betting the global AI infrastructure grab will flow through to its server CPU sales.
Data centre and AI products brought in $5.1bn in the first quarter, well ahead of expectations, and Chipzilla talked up the shift to “inference” computing. It said that inference requires more CPUs per GPU.
Tan said the AI story has been “almost exclusively” about GPUs and other “accelerator” chips, but he reckons the CPU is now an “indispensable foundation of the AI era”.
Chipzilla reported a net loss of $3.7bn, blaming a $3.8bn goodwill writedown tied to its 2017 Mobileye buy, while adjusted net income came in at $1.5bn.
Intel chief financial officer David Zinsner warned that supply constraints on memory, wafers and other critical bits are still squeezing the whole sector.
Its manufacturing unit posted $5.4bn of revenue, ahead of the $4.6bn analysts expected, though most of that came from making its own chips. Chipzilla is still banking on landing external customers in the second half of this year.
Musk signalled confidence in Chipzilla’s upcoming 14A process, saying he plans to use it in his vast factory to supply SpaceX and Tesla. Chipzilla said 18A yields are on internal targets, and that 14A is tracking better than 18A at the same stage.
